The COP29 Presidency of Azerbaijan has succeeded in getting the Fund for Loss and Damage up and running and ready to distribute money in 2025.
The establishment of the Loss and Damage Fund was first agreed upon during COP27 in Egypt, aiming to provide financial assistance to countries most vulnerable to the impacts of climate change.
At COP28 in the UAE, a decision was reached to initiate the Fund’s operations. However, in an interview with Reinsurance News during the summit, WTW’s Dr. Simon Young cautioned that the insurance industry must approach its role in supporting the Fund carefully, avoiding overpromising its capabilities.
Nonetheless, the COP29 Presidency has reportedly made significant progress toward operationalizing the Fund, collaborating closely with its Board and the World Bank.
During the Fund’s third Board meeting in Baku in September, measures were taken to commence its operations, including the appointment of Ibrahima Cheikh Diong as the Fund’s Executive Director.
Within the framework of COP29, several important agreements related to the Loss and Damage Fund were also signed, including the “Trustee Agreement” and “Secretariat Hosting Agreement” between the Fund’s Board and the World Bank, as well as the “Host Country Agreement” between the Fund’s Board and the host country, the Republic of the Philippines. To date, the total pledged financial support for the Fund exceeds $730 million.
“With these achievements, the Loss and Damage Fund will be able to start financing projects beginning in 2025. This decision was long awaited by developing countries, including small island states, least developed countries, and African nations,” the COP29 Presidency of Azerbaijan said in a statement.
The COP29 Presidency of Azerbaijan also announced the agreement of the Baku Finance Goal (BFG), a new commitment to channel $1.3 trillion of climate finance to the developing world each year.
COP29 President Mukhtar Babayev observed, “When the world came to Baku, people doubted that Azerbaijan could deliver. They doubted that everyone could agree.
“They were wrong on both counts. With this breakthrough, the Baku Finance Goal will turn billions into trillions over the next decade. We have secured a trebling of the core climate finance target for developing countries each year.
“The Baku Finance Goal represents the best possible deal we could reach, and we have pushed the donor countries as far as possible. We have forever changed the global financial architecture and taken a significant step towards delivering the means to deliver a pathway to 1.5C.
“The years ahead will not be easy. The science shows that the challenges will only grow. Our ability to work together will be tested. The Baku Breakthrough will help us weather the coming storms.”
